Case # 155

SHRIMP SPECIALIST v. FUJI TRIUMPH

G.R No. 168756 ǀ December 7, 2009
Digested by: Israel D. Bandonill

The general rule is that obligations incurred by the corporation, acting through its directors,
officers, and employees, are its sole liabilities. However, solidary liability may be incurred,
but only under the following exceptional circumstances:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith
or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of
interest to the prejudice of the corporation, its stockholders or members, and other
persons;

2. When a director or officer has consented to the issuance of watered stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his
written objection thereto;

3. When a director, trustee or officer has contractually agreed or stipulated to hold

himself personally and solidarily liable with the corporation; or

4. When a director, trustee or officer is made, by specific provision of law, personally

liable for his corporate action

FACTS: SHRIMP SPECIALISTS (SS) and FUJI TRIUMPH (FT) entered a distributorship
agreement, whereby FT will supply SS “prawn feeds” on a credit basis. SS ordered prawn
feeds to FT and issued the necessary checks to cover the price stipulated. However, in one of
the dates, SS issued a stop-payment order because according to SS, the shrimp feeds that
were delivered by FT was contaminated with “aflatoxin”. FUJI did not deny this, and
promised to deliver new ones that are clean. Again, SS issued the necessary checks, however
upon presentment by FT to the bank, it was dishonored because of the stop-payment order
that was issued again by SS. SS claimed that the new stocks of “prawn feeds” were still
contaminated with aflatoxin. Consequently, FT filed a criminal case of B.P 22 or bouncing
check laws against EUGENE LIM (president of Shrimp Specialist Corporation) and
SHRIMP SPECIALIST CORPORATION.

ISSUE: Should Eugene Lim in his capacity as president of SHRIMP SPECIALIST

CORPORATION be held solidarily liable with SHRIMP SPECIALIST
CORPORATION itself?

RULING:

No. Obligations incurred by the corporation, acting through its directors, officers, and
employees, are its sole liabilities. However, solidary liability may be incurred, but only under
the following exceptional circumstances:
 1. When directors and trustees or, in appropriate cases, the officers of a corporation: (a)
vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or
with gross negligence in directing the corporate affairs; (c) are guilty of conflict of
interest to the prejudice of the corporation, its stockholders or members, and other
persons;

2. When a director or officer has consented to the issuance of watered stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his
written objection thereto;

3. When a director, trustee or officer has contractually agreed or stipulated to hold

himself personally and solidarily liable with the corporation; or

4. When a director, trustee or officer is made, by specific provision of law, personally

liable for his corporate action

In this case, none of the following exceptions are present neither was there any proof that
Eugene Lim was guilty of bad faith. Hence, he should be absolved from liability.